Sarasota Memorial Dissolves Management Deal With BayCare

Thursday

Jun 19, 2014 at 10:11 PM

By BARBARA PETERS SMITHHALIFAX MEDIA SERVICES

SARASOTA | A pioneering management contract forged a year and a half ago between Sarasota Memorial Health Care System and Clearwater-based BayCare Health System is due to end by mutual agreement today, according to a municipal bond disclosure statement that the Sarasota public hospital posted this week.The strategic partnership between the two nonprofit health providers will continue, but Sarasota Memorial will no longer pay BayCare some $1.5 million a year to provide management services."This was an ideal time to scale it back if we were going to do it," said Sarasota Memorial spokeswoman Kim Savage. "We were either going to get into it deeper or not at all, and we decided to stop short of integrating our two operating systems."The decision, she added, will allow Sarasota Memorial to search on its own for a new CEO to replace Gwen MacKenzie, who left the hospital recently after nine years in charge. Her departure was not a reason for dissolving the management structure, Savage said, but it coincided with the hospital board's annual strategic planning process."This is a discussion that had been going on for several months," Savage said. "Basically, both systems decided we could achieve our goals without the management piece."Sarasota County's 806-bed hospital, which employs about 4,000 people, entered into a formal alliance with the 3,306-bed Tampa Bay hospital chain in December 2012. Although BayCare is a nonprofit system, it is privately held. (Two hospitals serving Polk County, Winter Haven Hospital and South Florida Baptist Hospital in Plant City, are affiliates of BayCare Health System.)The Sarasota Memorial board hoped to benefit from BayCare's clout in negotiating with insurers but was not "able to use size and scale in that regard because of our separate contracts," Savage said.The management agreement, intended to run for five years, involved making Sarasota Memorial's three top officials employees of BayCare, but still answerable to the board in Sarasota. The management fee started out at $1 million for the first year, escalating to $1.5 million for the next two years and $2 million thereafter."The board is going to make sure we get more out of it than whatever this fee would be," then-board chairman Richard Merritt said in 2012. "There's exit strategies on both sides."Instead of realizing efficiencies, the arrangement added an extra layer that proved unwieldy, Savage said."It was a novel approach, but it seemed like things slowed down and took a little longer," she said.The monthly payments to BayCare will end, but the two systems' affiliation will continue. Results of that alliance so far include cost savings on hospital equipment, access to extra nurses in BayCare's "float team" of temporary workers and a specialized ventilator unit at Sarasota Memorial's skilled nursing facility, Savage said.The unique shared-management experiment is just one survival tactic attempted in an era of swift change for the hospital industry, said hospital consultant Peter Young, president of HealthCare Strategic Issues in Fort Myers."Clearly, the value wasn't there," he said. "I suspect that now we're a year and a half deeper into the value era of health care, where volume and fee-for-service goals have been replaced by an emphasis on offering value. This has changed a lot of the premises and calls for a more local focus on quality care."Young added that Sarasota Memorial's search for a new CEO will likely reflect this shift toward local provider networks."As Sarasota turns over its leadership," he said, "they'll be looking for not only experience in running a hospital, but a new kind of talent in the areas of building a continuum of care and physician integra­tion."